WCB outlines opposition to Murray Goulburn approach

Posted by Josette Dunn on 15th March 2010

The board of Australian dairy group Warrnambool Cheese and Butter (WCB) on Friday (12 March) again urged shareholders to resist the takeover approaches for the business.WCB’s board has rejected takeover advances from two parties, including two unsolicited overtures from local peer Murray Goulburn.

Murray Goulburn said yesterday that it has built an 8.37% stake in WCB through a series of on-market purchases. The co-operative paid about A$4.50 per share, valuing WCB at around A$180m.

In an open letter to shareholders, WCB chairman Frank Davis again rejected the arguments Murray Goulburn has advanced to support its hostile takeover bid.

While Murray Goulburn has insisted that its acquisition of WCB would increase returns to farmers, Davis maintained that the benefits of remaining a listed company outweighed those of joining the cooperative.

“We believe the interests of WCB’s suppliers and shareholders are absolutely aligned: th ekey to the long-term health of WCB is milk supply and it is therefore in the interests of all shareholders that WCB has a good relationship with its suppliers,” Davis wrote.

In addition, Davis claimed, WCB has outperformed Murray Goulburn “across a large range of financial metrics” – including sales, milk intake and profits growth – since 2000.

“The comparative performance of WCB on the key measures used by Murray Goulburn has been significantly superior,” Davis insisted.

The identity of the other suitor is unknown.

just-food is the world’s leading portal for the global pre-packaged food and retail industries. Its daily mix of breaking news, views, analysis and research serves over 100,000 food executives each month. http://www.just-food.com/